General Atlantic joins push for Middle East sovereign wealth

Some of the private equity industry’s biggest names are expanding in the Middle East to develop closer ties with the region’s deep-pocketed investors and source dealmaking opportunities.

General Atlantic, which manages nearly $73bn, recently named Samir Assaf — who joined in 2021 as a senior adviser — to the newly created role of chairman of its Middle East and North Africa business.

Assaf, HSBC Holdings’ former chief executive officer of global banking and markets and still an adviser to the bank, will identify investment opportunities and build relationships across the region.

Investing in the Middle East

The New York-based firm has been investing in the Middle East since 2015 and has so far deployed about $400m in firms such as the online real estate search platform Property Finder and Network International, the credit card processing firm.

The company currently doesn’t have anyone on the ground but intends to build a physical presence in the region later this year.

“We are highly energised by the new generation of entrepreneurs building businesses in the Middle East,” General Atlantic chairman and chief executive officer Bill Ford said in a statement. “We see meaningful opportunities to expand our commitment to the region strategically and Samir’s expanded role as MENA chairman accelerates our ability to do that.”

The firm joins peers such as TPG Capital, Ardian SAS and CVC Capital Partners in either opening new offices or boosting headcount in the United Arab Emirates.

Dubai in particular is emerging as a favored destination for hedge funds and financial firms, which are drawn by its ease of doing business, tax-free status, and its allure as a global travel hub. General Atlantic has also set its sights on the “entrepreneurial hubs” of Riyadh, Abu Dhabi and Doha.

Read: Dubai’s DIFC in talks to attract 50 hedge funds

The region’s close proximity to some of the world’s biggest sovereign wealth funds – including the Abu Dhabi Investment Authority and Mubadala Investment Company, which together oversee more than $1tn, has added to the appeal at a time when many other investors in buyout funds, like US pensions, are increasingly capital constrained.

This is prompting many private equity firms to spend more time seeking capital from investors in the Middle East, amid a broader slowdown in global fundraising, which fell by an estimated 21.5 per cent last year, according to data provider Preqin.

Investors are having to contend with inflation, higher interest rates, and the so-called denominator effect, where falling stock prices inflate portfolios’ relative exposure to private equity.

TPG also opened a Dubai office in recent months to focus mainly on investor relations, according to a person familiar with the matter who asked not to be identified. CVC opened an office in Dubai last year and now has a handful of dealmakers based there.

In Abu Dhabi, Paris-based private equity firm Ardian opened an office last month to build on existing partnerships with sovereign funds. It will also help the group’s portfolio companies expand regionally and support direct investment in companies across the Middle East, with two hydrogen-related deals in the pipeline.

In 2018, the region’s private equity market was hit by the startling collapse of Abraaj Group, the once-mighty Middle Eastern private equity firm. After its demise, private equity firms in the region struggled to raise and invest funds.